Loc: South Jersey (Pinelands)
Sounds as if it might have been difficult to convince leader A to lower, but after all the discussion about hauling and with 20-20 hind sight and assuming the first second was off the wall too; then perhaps the easiest solution without cutting the rope might have been to climb through quickly with goal being to help as quickly as possible. Just clip the pro already on route etc. Get to the top, and lower both seconds all the way to the ground using both ropes. Knot passing should be especially easy with two leaders working. Even passing a knot could be avoided by allowing a belay device and biner to be lowered too.
That said, I am not as completely against cutting the rope as others have been even though I admit all their concerns are valid. It was a viable option, and it sounds as if you handled it better than some feared. Note that whatever rope the girl cut, she would still be hanging by the other. and it would have been unlikely to cut both at once. I do admit that I dont like the idea of her dropping the knife. Things we dont know: was the knife slung to something? How large and sharp was it ?
Personally and I emphasize that with 20-20 hindsight I could have performed my above solution in about the same time as building and anchor and cutting the rope. Yes Ive read Kents posts and agree that climbers ought to make the effort of learning how to gain mechanical advantage and when it will be necessary and/or useful. In this case lowering would have been quicker and have a much higher chance of success, and be mostly free of the dangers presented by high mechanical advantage systems. I know I learned something so this discussion was useful to me.